Bi-Weekly Pay "To be Budgeted"

Hello!  I hope someone can give me some tips and tricks about making YNAB work for you when you are paid bi-weekly.  I've been using YNAB for about a year now and it has worked great - when I was paid once a month.  I've now moved to a bi-weekly pay schedule and my "to be budgeted" is always in the red.  I am making the same amount of money, the only item that has changed is the frequency.  

 

When I was paid once a month, I would simply log in all of my expenses on the 30th of the previous month, pay everything on the 1st and the remaining would go to savings/debt.  I never had a problem with anything being over budget.  

 

Now I'm constantly in the red in the to be budgeted.  Any advice on how to keep that from looking over budgeted?  My biggest fear is that the numbers will not calculated correctly and I will not have a good view of my money. 

Thank you! 

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  • I believe that you are finding that it is difficult to make the YNAB software work if you do not actually follow the YNAB method. The YNAB method is that you allocate the funds you have RIGHT NOW, not the funds you anticipate receiving. Also, that you make your spending decisions based on the available balance of your categories. Which means recording your expenses as you make them, not logging them all at the end of the month in one fell swoop. I do 100% manual entry of all my transactions. That's 3 minutes a day. Some people opt to link their accounts. The official methodology is to still do 100% manual entry and use the import as a back up/double check. Obviously many people who link their accounts neglect to do manual entry and thus are at risk of overspending their category balances due to the multiple day lag between incurring an expense and the software finally being able to import the cleared transaction.

    So getting paid every other week - when you get your paycheck ask yourself, what does this money have to do before I get paid again? Fund those categories. If there is money left over, don't forget upcoming quarterly or annual expenses. Or setting aside money monthly to fund birthdays or holidays so that you aren't scrambling right before an event. Are you going to have to replace your roof in 5 years? Start saving for that (Yes I know that you've been using the software for a while, but since you haven't been following the method, I want to make sure this stuff is flagged).

    If you are paid 26 times per year, there will be 2 months per year that you receive 3 paychecks. A way to smooth out your budgeting is to budget each month as if you will only ever receive 24 paychecks and then put the third paychecks in a Deferred Income category and slowly release funds from that category back to TBB (assuming the category held 2 paychecks of income, you would want to release 1/12 per month). Also ideally you would maybe set aside a little each month in a category to build an administrative buffer (this is not "extra money" or an emergency fund). Once this category held a full month's worth of paychecks (let's say this happens on August 22nd with your final August paycheck), you would release the funds back to TBB and hide the category because you won't need it any more. Then you would budget the entirety of September. After that, all paychecks received in September would fund October. You could budget the entire month all at once when the final September pay arrives. Then all October checks would fund November, etc and so on.

    TLDR: TBB should NEVER be red. If it is, you need to remove funds from your categories until it is 0. YNAB is an envelope budgeting method. The way envelope budgeting works is that you have all your money in cash and you dump it on the kitchen table and start stuffing it in envelopes marked Rent, Groceries, Fun, Gas, Utilities, Summer Camp, 2020 Family Reunion, etc. And as you spend the money, you take it out of the appropriate envelope. When the Groceries envelope is empty, you have to take money out of some other envelope if you want to buy a loaf of bread. Here's the key - you can't fill an envelope with IOUs. When the pile of cash on the table is gone, you have to stop filling your envelopes, so if you get your money more than once a month, you have to fill your envelopes in multiple sessions unless you have enough money not already in an envelope to fill each envelope with a month's worth of funds.

    Reply Like 11
      • asif m
      • asif
      • 4 mths ago
      • Reported - view

      jenmas I found out about YNAB today. Still learning this new way of thinking about budgeting. Your explanation was very helpful.

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      • jenmas
      • jenmas
      • 4 mths ago
      • 1
      • Reported - view

      asif m YNAB is not really meant to be figured out by messing around. There are classes you can take (either live or by watching a pre-recorded version), videos to watch, etc. I suggest that you do that.

      Reply Like 1
  • Once your TBB is $0, you stop budgeting. For now you budget half of your month each time you get paid. 

     

    By budgeting only 2 paychecks each month, the 3 paycheck months will help you get ahead. Use the third paycheck to fund half of the next month. After a year you will be budgeted and can budget for the whole month at the beginning of each month as you were used to because paychecks received this month will fund next month....

    Reply Like
  • YNAB has never been a great fit for people who get paid fortnightly, or for that matter if you have bills that get paid 2 or 3 monthly.  You can certainly make it work (and I have, for about 5 ½ years), but you have to work around things a little with planning, goals etc.

    My strategy for getting paid is to work my monthly budget off two fortnightly pays.  Then the extra pay each 6 months or so is a bonus, and tops up savings categories that don't get so much love in regular months.

    It's also important to go back to basic principles, and only budget the money you have - you simply can't apply a full month income to the month's expenses if what you actually receive is less than that.

    Reply Like 1
      • dakinemaui
      • dakinemaui
      • 4 mths ago
      • 8
      • Reported - view
      balance said:
      YNAB has never been a great fit for people who get paid fortnightly

       I don't think this is true at all. I would agree if you had said, "it's not a great fit for people who allocate money they don't have," then I'd totally agree. The simple fact is you can't allocate your future income and expect the plan to be feasible until that money arrives. This holds true even for monthly pay cycles.

      That seems to be the biggest adjustment when starting YNAB, likely because traditional budgets don't do it that way. The "planning, goals, etc." you mention is absolutely necessary because YNAB is very effective at showing you money can only be spent -- or planned to spend -- once.

      A traditional budget, in contrast, sweeps that under the rug, letting you buy something before income arrives because you implicitly took funds intended for something else. "Yeah, I'll just 'cash-flow' that purchase, no problem, bro." You're just hoping you don't need that something else before income arrives. YNAB absolutely calls you out on such a practice.

      Reply Like 8
  • YNAB works perfectly fine for people who get paid fortnightly. I know as I've been paid fortnightly my entire life and first bought YNAB in 2008. The only difference between getting paid fortnightly and monthly is how often you budget. Rather than once a month when paid monthly, you budget every two weeks.

    Once you've saved up enough, what YNAB once called a buffer (approximately one month's pay), you can then budget an entire month at once. At that point you are no longer living paycheck to paycheck. As soon as my last paycheck of February arrives, I can budget the entire month of March.

    The bottom line is that you only budget money you have.

    Reply Like 7
  • i was having the same in the red problem. so should i be halving my "immediate obligations"  like fuel or day care since actually get paid out per week and would match my two week pay cycle?

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      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 4 mths ago
      • 1
      • Reported - view

      Gold Mask That's really unnecessary. The basic idea that you would learn if you take the beginner classes is, "what do these dollars (rupees, kroner, pesos, whatever) need to do before I get paid again?" Then allocate money for those categories. When you get new money, ask yourself the same question and budget accordingly. Keep in mind that you have "true expenses" that come up periodically or even on an unknown schedule (when something breaks), so some of your dollars need to do the job of waiting to be spent on those.

      Just repeat that process every time you get dollars.

      Reply Like 1
      • Gold Mask
      • Gold_Mask.1
      • 4 mths ago
      • Reported - view

      bevocat good to know i have only been setting it up as of the past day, feel kind of trained to think being in the red is not good and know my number add up, but maybe not this system. sounds like i have to get to the course  and it could iron itself out in the cycles...thanks.

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      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 4 mths ago
      • 1
      • Reported - view

      Gold Mask Being in the red is not good! I perhaps did not express myself well. You should never have a negative To Be Budgeted value. When you get money, you allocate jobs to it that it needs to do until you get paid again but you must stop when To Be Budgeted reaches 0!

      Please, please take the beginner classes.

      Reply Like 1
      • Ben Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 4 mths ago
      • Reported - view

      Gold Mask If you don't have time for the classes, YNAB has a lot of videos and guides as well. When started, all of 2 months ago, I watched all the videos by YNAB on youtube. Admittedly, that's like 4 hours of material, so you might want to spread it out, but I was snowed in that day. 

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      • Gold Mask
      • Gold_Mask.1
      • 4 mths ago
      • Reported - view

      bevocat will be thanks:)

      Reply Like
      • Gold Mask
      • Gold_Mask.1
      • 4 mths ago
      • Reported - view

      Ben K.  thanks i started last night but it takes a while for the pieces to sink in for me:)

      Reply Like
      • Ben Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 4 mths ago
      • Reported - view

      Gold Mask No worries. We all learn differently. You sound like a see the big picture, front to end,, in order or not, then go into details person. I'm a give me all the details, in order - really don't go out of order - person. Actually, it's been called concrete- linear processing/thinking. 

      Reply Like
  • Ashley Diane and Gold Mask I have always been paid every two weeks.  To make matters worse, my paycheque fluctuates wildly.  I work shift-work with over time, stand by, and on call plus my regular hours.  A cheque with 5 regular shifts on it is going to be significantly different than one with 7 shifts and 4 hours of OT and 3 call backs.  I manage budgeting with YNAB quite easily following what jenmas and others have said.  Budget until the big green number at the top equals 0.  My "trick" is how I label my categories.

    Say I'm getting paid on the 4th and the 18th this month.

    My Budget categories would look something like this:  

    Bi-weekly & Monthly Obligations

          Mortgage $600 bi-weekly                                                     600

          Groceries $200 bi-weekly                                                      200

          5 - Hydro $100                                                                             100

          30 - Bank Fee $15                                                                            0

    True Expenses

         Auto Maintenance $70                                                                70 

    Yearly Obligations

          Apr - Professional Association $500                                  30   

          Apr - Drivers License $90/5yrs                                              0

                                                                                                                    total 1013.16

     

    I know I'm going to need a roof over my head and food every paycheque so they are labelled bi-weekly, I put the exact amount of the mortgage in the name so that it's easy to remember how much to budget and I put a guess in for groceries to start I can adjust it up or down depending on the amount of my cheque.  I get paid on the 4th so  I know I need to fund my hydro bill before my paycheque on the 18th, but the bank fee can wait until the next paycheque if it has to.  I put the day of the month these bills come out of my account in the name and order them accordingly in my category list so I can easily go down the list when I'm doling out the money.  I also make use of the Scheduled Transactions feature so I can see what's coming out of the account before my next paycheque in the ledger.

    For True Expenses I know that these are categories I want to carry over, I also know that it's variable, so I put a target value for the month in the title.

    For the Yearly or longer term items I put the month that they are due in the title and the total for the year or 5 years.  Then I set a goal "target value by date" for the month before the due date (just in case it's due on the 1st of the month).   Why are things always due on your birthday?

    Say my paycheque on the 14th is $1000, I go through and plunk in the numbers starting with the ones that are due the soonest ("What does this money have to do before I get more money?").  Then it's a matter of current priorities until I reach 0.

    Reply Like 2
    • Silver Robot Thank you for sharing that, I'm in a similar situation and that helps me. One thing though - next time you get paid, do you just go in and adjust your budgeted amount for each category (so you change your mortgage from $600 budgeted to $1,200 budgeted)? What happens when you get a paycheck that covers one week in one month, and one week in the next?

      Reply Like
    • Aquamarine Falcon since I'm not at a point where I can allocate an entire month's expenses at once I still have to allocate each paycheque.  So yes, every paycheque I add 600$ to my mortgage category.  My mortgage is biweekly-accelerated so I make 26 payments every year which works out to 13 months/year if I paid monthly.  So every paycheque has a mortgage payment coming out of it.

      When the paycheque overlaps months which it does almost every month I have found for me it is important to do the allotments in the month is was paid.  It likely doesn't make a difference but it messes with my brain if I don't have a 0 "to be budgeted" before the month turns over.   I just budget the way I normally would all in the same month.  So my Hydro bill is due on the 5th and I'm not getting paid until the 10th.  I might end the month with a total of 200 allotted for hydro, 100 for the current month, and 100 for the next month.  When the month turns over, you will see 100 in green in the hydro category waiting to be used for the bill on the 5th.

      Does that help at all?

      Reply Like
    • Silver Robot This does help, thank you! I've been using YNAB for a few years now. For some reason, I really don't like to edit what I put in the budgeted amount at when I initially set my budget. For some reason it seems wrong to me. So for example, instead of having 1 mortgage line in my budget, I would have 2, one for each paycheck. That starts to get difficult though when you get paid bi-weekly (a change that recently happened to me). I think I'm going to start a new budget and try to just have one of each category, and just change the budgeted amounts for each of them as I get paid. We'll see how it goes!

      Reply Like
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 2 wk ago
      • 3
      • Reported - view

      Aquamarine Falcon If you aren't editing Budgeted amounts regularly, you'r not following Rule 3. So you might as well get comfortable with it.

      Reply Like 3
      • jamesx4
      • Software Engineer
      • jamesx4
      • 2 wk ago
      • Reported - view

      Aquamarine Falcon Yeah, I hear ya'.  For me, that's where the different goals you can put on a category come into play.  My Mortgage category is setup with a Monthly Funding Goal.  The first paycheck funds half that goal and YNAB keeps reminding me I'm not done yet via the colored Amount.  So when second paycheck roles around my Mortgage category gets fully funded goes green meaning we're all systems go for our next mortgage payment.  

      If I don't use those goals for important, time sensitive categories in YNAB then I  really do feel like I'm flying blind.   

      Reply Like
  • I get paid every other week also. What I've done that's been helpful to me is to set up both my fixed and variable expenses by the day of the month they are due. So my rent obligation due on the 1st of every month heads up the list. That way when I get my first paycheck of the month (or have leftover funds from the previous month, I budget for the things that need to be paid before I get my next paycheck. In each category I note the date the bill is due and the amount (if it is fixed). This makes it pretty easy to budget each month by just going down the list without having to look up dates or amounts.

    Reply Like 1
    • eloquentz
    • Numbers Wizard (Accountant), Acoustic Artist (Musician) and Jill of all Trades (Wife & Mother)
    • eloquentz
    • 2 wk ago
    • Reported - view

    I have notes in each category for recurring transactions about when they hit my bank account. I have goals set for the categories with automatic payments. (I have goals set for other things as well, but the automatic payments are much more mindless than the fact that I budget $X for groceries.)  I am not yet a month ahead, so I budget things I need early in the month and worry about the rest of the month later.

    Reply Like
  • I'm paid bi-weekly as well.  One of the things that helped me immensely was to actually use a Group scheme like YNAB sets up on a new budget.  When I first jumped into YNAB, the first thing I did was replace those "silly" Groups like "Immediate Spending" and "True Expenses" and instead added my own that were theme based like "Housing", "Transportation", "Food", etc.  Problem is when it came time to fund my categories with a paycheck it was hard to tell what my money needed to do before the next paycheck.  I didn't have a clear picture of priorities without jumping back and forth between my groups and categories.  

    Now I have Groups "Immediate Expenses", "Online Services", "True Expenses", "Savings Goals" and "Just for Fun" in that order and the order is key.  Many of the categories in the first two groups are bills that are on autopay so I put the date they usually come due or are autopayed and "AP" if they are autopayed in the category name.  Then when I get a paycheck I start at the top, taking care of my most important Immediate Expenses that will come due before my next bi-weekly paycheck (that's where the visible dates come in).  For things like Groceries or Gas for the car I split my monthly budget between each paycheck.  For example, we spend $800 Groceries/mo which means I take $400 from each paycheck.  

    Once the immediate expenses are covered I drop down to the Online Services.  I added this category because I have a number of them and they're all autopay.  So I make sure I cover the ones that are coming due before my next paycheck.  These aren't all important and I could live without, but as long as I'm subscribed to them, they're automatically drawing money out of my account so I better make sure they're covered.

    Then we drop down to True Expenses.  Some of these will only get funded if I had to draw them down this month, like Auto Repairs.  Others will get a little each month like the Christmas Fund.  These are key to eliminating the surprises or what I call "budget busters".  

    Finally we drop down to the Savings Goals and Just for Fun.  These are last because if needed I don't really need to fund these.  If I had an irregular income I might run out of money with the current paycheck before I had a chance to fund some of these.  

    So basically, organizing the Groups in this way helps me prioritize the things that must be funded first and then I move on to the groups and categories of lesser and lesser importance.  

    Reply Like
    • jamesx4 Thanks for sharing! I think for me the hard part is that if I just have one line for groceries, and I overspend, it's not immediately clear if that was from my first paycheck of the month, or my second. Now that I'm typing it out though, I guess it doesn't really matter. I'm going to try setting up a new budget similar to what you have and see how it works!

      Reply Like
    • jamesx4 I just started this and am trying to wrap my head around it. We get paid twice a month and I started on the second paycheck. If 800 is what you have for groceries for the month is that what you put in the budgeted category? Or do you put $400 in that category?  

      Reply Like
    • Hi Khaki Robot !

      YNAB is a bit different than other budgeting tools you may have used in the past. Instead of budgeting using your expected monthly income, you'll only budget the funds you currently have. So if you have $1,000 in your account, how much of that is meant to be spent on Groceries? If $400 of that is for Groceries, budget $400 towards your Groceries category. You'll then have $600 remaining to budget towards your other expenses that need to be covered before receiving your next paycheck.

      Have you seen our Ultimate Get Started Guide? It goes over how YNAB works and should help you get set up!

      If you still have questions, please don't hesitate to ask!

      Reply Like
      • jamesx4
      • Software Engineer
      • jamesx4
      • 5 days ago
      • Reported - view

      Khaki Robot Since I get paid every two weeks, I put $400 in groceries with each paycheck.  Groceries is in my Immediate Obligations so it's one of the categories I first look at when asking, "What does this paycheck need to do before the next one arrives?"  Well, it has to feed my family and that takes about $400 every two weeks right now. 

      Eventually, when I'm not living paycheck to paycheck and I'm living this month off last month's income, this will change.  At THAT point, I'll start funding my Groceries category with the full $800 at the 1st of the month, but I'm not there yet ;-)

      There's a few categories I split between paychecks.  Groceries, Gas for the car, and my mortgage payment (just because it's bigger than any other expense).

      Reply Like
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